Growing up, I was always afraid of standing up in class to speak or being singled out to answer a question. I thought it was because I was shy. Then I learned that people feared public speaking more than death!
Public speaking might have topped the list of fears at one time, but it’s been replaced. A survey by Allianz Life Insurance reported that three out of five people over age 55 fear running out of money in retirement, and 45 per cent don’t feel confident they’ll be able to afford the post-work lifestyle they want.
As time goes by, people are growing increasingly afraid they won’t have enough money. It’s gut-wrenching to wonder, “Will I have enough?” Or worse, “Will I have to depend on the kids?”
The Allianz poll also asked the following question to people who had amassed between $1 million and $10 million in net worth: “Are you concerned about losing your wealth?” An astonishing nine out of 10 millionaires said they were indeed worried about losing their wealth.
Peace of mind is knowing for certain that you’re doing everything possible to ensure you’ll have the freedom to live the rest of your life on your terms.
This fear is not unfounded. In addition to the ongoing challenges of the pandemic, Canada’s annual inflation rate has been increasing; it is at its highest point in over 30 years. This has led the Bank of Canada and most other central banks around the world to crank up inter- est rates, with the goal of reigning in the scourge of inflation.
Combined with the growing cost of living (which makes it harder to preserve your hard-earned dollars), the number of years you will need to fund your lifestyle after retirement has increased dramatically over the past few decades.
Steady gains in life expectancy were made through the 1960s, ’70s, ’80s and ’90s. Then, there was a huge jump in the 2000s. By 2009, Statistics Canada reported that a 65-year-old male had an average life expectancy of 18 more years, while a 65-year-old female could expect to live an average of almost 22 more years.
While it is a good thing that advances in science and healthcare have increased the number of potential years we can enjoy retirement, it can cause added stress. The combination of high inflation and increased lifespan makes the worry of running out of money even more pronounced.
It raises the question, “Is your retirement income plan stress-tested to age 100?”
That’s important. You want to make sure.
A secondary question is this: How much in- come will you need in retirement? This question is important because you may have heard one of the common myths out there, which is that you can retire on 70 to 80 per cent of your working income.
If you have subscribed to that standard in your retirement planning, I have two questions for you:
- Which 20 per cent or more of your lifestyle do you not want to enjoy? Will you cut travelling, quit your hobbies and stop providing for the people and causes you care about?
- Is it possible you might need more after retirement to do everything you’ve been putting off?
Peace of mind is knowing for certain that you’re doing everything possible to ensure you’ll have the freedom to live the rest of your life on your terms. Maybe you are in good hands, but maybe you could use a specialist to take a second look. Either way, you want to be certain, because you only retire once.
First published in Think Big Magazine Q4 2022 issue and Living 55Plus Winter 2023 edition.
